ACT3127 Advanced Financial Accounting II

1. ACT3127 Advanced Financial Accounting II FRS 2: Share-based payment Some illustrations

2. Contents: Illustration for SBP • Goods • Services – immediate • Services – vesting period

3. Goods: equity-settled SBP A acquire a building by issuing 1m of its ordinary shares (par RM1.00). Its share has a market value of RM2.50 at the date of acquisition. The value of the building by professional valuer: a) RM20m b) cannot be measured reliably

4. Goods: equity-settled SBP • Dt Building RM20m Cr Share Capital RM1m Cr Share Premium RM19m b) Dt Building RM2.5m Cr Share Capital RM1m Cr Share Capital RM1.5m

5. Services: equity-settled SBP A manager granted 100,000 ESOS, valued at RM2 each, on 1st Jan 2005. The exercise price was RM3 each. Par value of the shares is RM1 each. a) the option vest immediately, and exercised immediately b) the option vest on 31st Dec 2006 and exercised right after.

6. Services: equity-settled SBP a) Dt Cash RM300,000 Dt Employee expense RM200,000 Cr Share Capital RM100,000 Cr Share Premium RM400,000 b) Dt Employee expense RM100,000 Cr Capital reserve RM100,000 Dt Employee expense RM100,000 Cr Capital reserve RM100,000 Dt Cash RM300,000 Dt Capital reserve RM200,000 Cr Share Capital RM100,000 Cr Share Premium RM400,000

7. Services: equity – settled SBP 4 executives granted 100,000 ESOS each person, valued at RM2 each, on 1st Jan 2005 and will be vested on 1st Jan 2009, given that they stayed in the company till that date. The exercise price was RM3 each and the par value is RM1.00 each. • All stayed in the company until vest date and exercise the option • All stayed in the company until vest date but none exercise the option. • 1 executive left the company in 2007, the rest made it and exercise the option • All executives left the company in 2007.

8. Services: equity – settled SBP • Annual recognition: Dt Employee exp. 200,000 Ct Capital reserve (cost) 200,000 (stock option) At vest date and exercise: Dt Cash 1,200,000 Dt Capital reserve 800,000 Ct Share Capital 400,000 Ct Share premium 1,600,000

9. Services: equity – settled SBP b) Annual recognition: Dt Employee exp. 200,000 Ct Capital reserve (cost) 200,000 (stock option) At vest date and exercise: Dt Capital reserve (cost) 800,000 Ct Capital reserve 800,000

10. Services: equity – settled SBP c) Annual recognition: (2005 – 2006) Dt Employee exp. 200,000 Ct Capital reserve (cost) 200,000 (stock option) Annual recognition: (2007 – 2008) Dt Employee exp. 100,000 Ct Capital reserve (cost) 100,000 (stock option) At vest date and exercise: Dt Cash 900,000 Dt Capital reserve (cost) 600,000 Ct Share Capital 300,000 Ct Share premium 1,200,000

11. Services: equity – settled SBP d) Annual recognition: Dt Employee exp. 200,000 Ct Capital reserve (cost) 200,000 (stock option) At end of 2007: Dt Capital reserve (cost) 400,000 Ct Capital reserve 400,000

12. Service: cash – settled SBP An executive granted 100,000 appreciation rights on 1st Jan 2006, when the market price of the shares was RM2.70, given that she stayed in the company for the next 2 years. The followings are market prices for the shares and the rights: 31st Dec Shares Rights 2006 RM3.00 RM1.20 2007 RM4.00 RM1.50 2008 RM5.00 RM1.70

13. Service: cash – settled SBP As at 31st Dec 2008, she exercise the rights. Dec 2006 Dt Employee exp. RM60,000 Ct Liability RM60,000 Dec 2007 Dt Employee exp. RM90,000 Ct Liability RM90,000 Dec 2008 Dt Liability RM150,000 Dt Employee exp. RM80,000 Ct Cash RM230,000